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CENTRAL EXCISE DUTY

 
     Manufacture     SSI Exemption      Export  
 

The Central Excise Act, 1944 extends to whole of India. The Act levies a duty of excise on “manufacture” of “excisable goods” within “India”

Manufacture:

The term manufacture refers to any process, which result in the creation of new commercial commodity. Further following activities are deemed to be amounting to manufacture:

  • Process incidental or ancillary to the completion of a manufactured product
  • Process specified as manufacture in Chapter / Section Notes
  • Alteration of MRP in case of goods where MRP Based levy is prescribed.

Goods:

In order to be excisable, goods must possess the following characteristics:

  • Moveability
  • Marketability

Manufacturer:

The term manufacturer includes the following:

  • A person who manufactures goods on his own account.
  • A person who manufactures the goods through hired labour .

Taxable Event:

The taxable event is manufacture of excisable goods but the rate of duty and tariff valuation is determined at the time of removal of goods from the factory or warehouse.

Rates of duty: The Central Excise Tariff Act, 1985, governs rate of duty. There are two Schedules; First Schedule and the Second Schedule. General rate of excise duty is 10% plus 2% education cess and 1% secondary & higher education cess.

Valuation:

There are three methods for valuation of excise duty:

  • Tariff Value Method: Excise duty is fixed by the Central Government.
  • MRP Value Method: Excise duty is payable on the MRP value less certain % abatement.
  • Transaction Value Method: Applicable in a case where the goods are to be sold by assessee for delivery at time and place of removal to an unrelated person and the price is to be sole consideration.
 
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  SSI Exemption:

Any unit whose turnover does not exceed Rs.400 Lakhs in the preceding financial year is entitled for SSI exemption. Accordingly, it can claim full exemption from excise duty up to Rs.100 Lakhs of clearances.

Job Work:

Input tax credit can be availed on a goods removed from the factory without payment of duty for further processes to any job worker provided that it should be brought back to factory within a prescribed period from the date of removal.

 
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  Export:
In case where any goods are exported, the exporter can claim the following rebates:
  • Duty paid on such excisable goods or
  • Duty paid on materials used in the manufacturing / processing of such goods.

Filing of Returns:

A monthly return is to be submitted in Form ER-1 within 10 days from the end of the month. However, if the assessee is availing exemption, he is required to file quarterly return within twenty days from the end of quarter.

 
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